Lim Guan Eng shrugs off messages threatening to kill his family if Malaysia's ruling coalition is toppled in knife-edge elections on Sunday.

''I move on … the threats show how desperate they are and how close the vote will be,'' says Lim, the 52-year-old chief minister of Penang, an island on the north-west coast of peninsular Malaysia.

We are not to be cowed and submit to gangsters and thugs.

Malaysia's 13-party ruling Barisan Nasional coalition, facing its most serious challenge since the country gained independence from Britain in 1957, is throwing everything it can against Australian-educated Lim, who has transformed Penang since taking charge of the island in an upset state election victory in 2008.

Hundreds of thousands of flags and banners promoting 1Malaysia, the campaign theme of Barisan, are flying from poles and buildings in a sea of blue across the island.

Advertisement

Every night, thousands of people flock to 1Malaysia events where they eat free meals, drink free beer and where prizes such as motor bikes and television sets are handed out by the thousands.

Penang, a colourful mix of tropical beaches, high-tech development, pre-war Chinese shop houses and colonial architecture, is being promoted by a three-party opposition alliance as the model to reinvigorate south-east Asia's third largest economy of 29 million people where there has been unease over allegations of official corruption and poor governance.

''We have created a strong platform here to launch us federally … people can see the positive things we have done, which makes them confident about the rest of the country,'' says Lim, a former political prisoner who studied accountancy at Monash University.

Lim made powerful enemies five years ago when he dismantled the Penang chapter of Malaysia Inc, a coterie of corrupt businessmen with cosy government relationships, ordering that state public works contracts only be awarded through open, computerised tendering.

The move outraged traditionalists in the United Malays National Organisation, the main ruling party, who saw it as a dangerous move to tear down the country's so-called New Economic Policy, a system of affirmative action favouring ethnic-Malays that was introduced after race riots in 1969.

But Lim says he created a level playing field for all business people, including Malays, who comprise 35 per cent of Penang's voters, enabling them to compete for contracts based on merit not connections.

He moved quickly in 2008 to balance the books of the former colonial outpost, saving about 25 per cent of the state budget by wiping out graft. The move freed up millions of dollars for what he called an ''anti-corruption dividend'' that allowed him to fund ''people centric'' policies.

He introduced green policies in one of Malaysia's most urbanised cities, building bike lanes and parks and strictly enforcing rubbish collection. There was additional money for pensioners, schools, roads and drainage.

His attacks on rampant back-room deals and political patronage bolstered Penang's appeal as a hub for high-tech manufacturers such as Intel and Honeywell. Overall, Penang's investment doubled between 2008 and 2012 compared with the previous four years.

Despite being Malaysia's second smallest state, Penang topped the state investment league for the first time in 2010 and again in 2011. Penang's budget surplus grew 57 per cent between 2008 and 2011 as a chronic federal budget deficit pushed the national debt to 53 per cent of the economy.

For more than 20 years, Penang-born leisure park operator Sim Choo Kheng chose to do business outside of Malaysia because of the money politics that was entrenched here. ''I decided not to be part of it and spent years working in Eastern Europe and other parts of Asia,'' he says.

But the election of Lim's multi-racial Democratic Action Party in 2008 prompted him to return to develop a leisure theme park in Penang's hinterlands.

''There is a huge pool of talented Malaysian-born business people living overseas who will return to the country if there is a level playing field, if there is a good system of governance,'' he says.

Jerry Chan, chairman of Penang's Housing Developers' Association, says Lim has boosted business confidence but his government's insistence that decisions be popular has slowed development approvals. ''His popular support is real - he should use it more to push through policies that may not be popular,'' he says.

Analysts say transferring Penang's policies nationwide would not be straightforward in many areas and seemingly impossible in others.

Penang is the only state with a majority of ethnic Chinese, who comprise 54 per cent of voters. Malays comprise 65 per cent of the population nationwide, the Chinese 25 per cent and Indians 8 per cent.

Three other states run by the opposition, including two by the Islamist PAS party, have poor records on governance and transparency. They may even be recaptured by Barisan on Sunday, analysts say.

But Lim says the Penang model shows the opposition's campaign rhetoric can be matched by delivery on the ground.

Many analysts monitoring the closest-fought election in Malaysia's history say Chinese support for the government, particularly in urban areas, has collapsed, despite racial tensions being stoked by a few extreme Malay nationalists aligned with Barisan.

Ethnic Chinese want to start winning some of the big government contracts that under the four decades-old affirmative action program have traditionally gone to Malays.

Lim says the Chinese have also moved on from the days when they supported Barisan because they feared a repeat of the 1969 violence.

''This is part of the country's growing-up process,'' he says. ''There are concerns trouble may happen but we are not going to be cowed and submit to a minority of gangsters and thugs,'' he says.

''We have to stand up to this demon of racial hatred and fear … you cannot immediately take out the poison that has been implanted about the Chinese over 56 years. It will take some years.''

Lim says, in the past, Chinese were not able to walk into Malay kampungs without fear of attack. ''Now we can enter kampungs and are welcomed by some sections of the Malay community,'' he says.

Lim dismisses government claims that electing an opposition made up of parties with diverse interests would bring ''catastrophic ruin'' to the country.

He says the parties have a common purpose to wipe out the corruption that has left Malaysians caught in a middle-income trap with standards of living well behind comparable countries such as South Korea and Taiwan.

Outspoken and hyperactive, Lim is seen as a symbol of the opposition's impatience for change and would play a key role in a new government, possibly as deputy prime minister.

He has led attacks on government scandals and was sentenced to a year in jail in 1998 after he criticised the dropping of rape charges against a ruling party MP.

When the election was called, he handed over the keys to his Mercedes, saying integrity is a battle cry for the opposition and that official cars should not be used during campaigning.

He sometimes jumps on the back of a motor bike to beat Penang's traffic and joins strangers for meals at hawker stalls. Supporters swamp him wherever he goes and wait in long lines to buy his party's paraphernalia and T-shirts.

But Lim concedes that winning government federally on Sunday will be difficult, despite a palpable mood for change across the country, given that the odds are heavily stacked against the opposition, including what one commentator calls the ''mother of all gerrymanders''.

While opinion polling is unreliable in the country, most observers predict Barisan will scrape back, but nobody is dismissing an opposition victory.

Prime Minister Najib Razak has rolled back some race-based policies, promised greater social and political freedoms and scrapped a notorious Internal Security Act. He boasts a strong economic performance with the economy growing at 5.6 per cent last year.

The government owned or controlled mainstream media is only publishing damaging news about opposition parties and shamelessly spruiking Barisan propaganda.

For 18 months, the government has spent huge amounts of money pork barrelling voters, particularly the poor, a tactic that has reached a frenetic pace in the final days of campaigning.

The opposition is promising to provide free education, to reduce petrol pieces and to give poorer oil-producing states a larger share of royalties and revenues.

In Penang, the pork barrelling is so blatant that voters are given a coupon worth 200 ringgit ($64) to be redeemed if Barisan wins.

Narinder Roy, a 34-year-old Penang public servant, has spent each night of the campaign at the 1Malaysia free-for-alls with several of his friends.

''We drink. We eat. We take the money. But we will not vote to return Barisan to power,'' he says.

''There has been too much corruption and we think it's time for change.''